Is Tanking An Effective Strategy in the NBA?

In his farewell manifesto, former Philadelphia 76ers General Manager Sam Hinkie spends 13 pages explaining away the dismal performance of his team, which has gone 47-199 over the last three seasons. Hinkie’s main justification for all the losses involves the consolation of draft picks, which are the NBA’s way of rewarding the worst teams in the league. Here’s Hinkie:

"In the first 26 months on the job we added more than one draft pick (or pick swap) per month to our coffers. That’s more than 26 new picks or options to swap picks over and above the two per year the NBA allots each club. That’s not any official record, because no one keeps track of such records. But it is the most ever. And it’s not close. And we kick ourselves for not adding another handful."

This is the tanking strategy. While the 76ers have been widely criticized for their consistent disinterest in winning games, Hinkie argues that it was a necessary by-product of their competitive position in 2013, when he took over as GM. (According to a 2013 ESPN ranking of each NBA team’s three-year winning potential, the 76ers ranked 24th out of 30.) And so Hinkie, with his self-described “reverence for disruption” and “contrarian mindset,” set out to take a “long view” of basketball success. The best way for the 76ers to win in the future was to keep on losing in the present.  

Hinkie is a smart guy. At the very least, he was taking advantage of the NBA’s warped incentive structure, which can lead to a “treadmill of mediocrity” among teams too good for the lottery but too bad to succeed in the playoffs. However, Hinkie’s devotion to tanking – and his inability to improve the team’s performance - does raise an interesting set of empirical questions. Simply put: is tanking in the NBA an effective strategy? (I’m a Lakers fan, so it would be nice to know.) And if tanking doesn't work, why doesn't it?

A new study in the Journal of Sports Economics, published six days before Hinkie’s resignation, provides some tentative answers. In the paper, Akira Motomura, Kelsey Roberts, Daniel Leeds and Michael Leeds set out to determine whether or not it “pays to build through the draft in the National Basketball Association.” (The alternative, of course, is to build through free agency and trades.) Motomura et al. rely on two statistical tests to make this determination. The first test is whether teams with more high draft picks (presumably because they tanked) improve at a faster rate than teams with fewer such picks. The second test is whether teams that rely more on players they have drafted for themselves win more games than teams that acquire players in other ways. The researchers analyzed data from the 1995 to 2013 NBA seasons.

What did they find? The punchline is clear: building through the draft is not a good idea. Based on the data, Motomura et al. conclude that “recent high draft picks do not help and often reduce improvement,” as teams with one additional draft pick between 4 and 10 can be expected to lose an additional 6 to 9 games three years later. Meanwhile, those teams lucky enough to have one of the first three picks should limit their expectations, as those picks tend to have “little or no impact” on team performance. The researchers are blunt: “Overall, having more picks in the Top 17 slots of the draft does not help and tends to be associated with less improvement.”

There are a few possible explanations for why the draft doesn’t rescue bad teams. The most likely source of failure is the sheer difficultly of selecting college players, even when you’re selecting first. (One study found that draft order predicts only about 5 percent of a player’s performance in the NBA.) For every Durant there are countless Greg Odens; Hinkie’s own draft record is a testament to the intrinsic uncertainty of picking professional athletes.

That said, some general managers appear to be far better at evaluating players. “While more and higher picks do not generally help teams, having better pickers does,” write the scientists. They find, for instance, that R.C. Buford, the GM of the Spurs, is worth an additional 23 to 29 wins per season. Compare that to the “Wins Over Replacement” generated by Stephen Curry, who has just finished one of the best regular season performances in NBA history. According to Basketball Reference, Curry was worth an additional 26.4 wins during the 2015-2016 regular season. If you believe these numbers, R.C. Buford is one of the most valuable (and underpaid) men in the NBA.

So it’s important to hire the best GM. But this new study also finds franchise effects that exist independently of the general manager, as certain organizations are simply more likely to squeeze wins from their draft picks. The researchers credit these franchise differences largely to player development, especially when it comes to “developing players who might not have been highly regarded entering the NBA.” This is proof that “winning cultures” are a real thing, and that a select few NBA teams are able to consistently instill the habits required to maximize the talent of their players. Draft picks are nice. Organizations win championships. And tanking is no way to build an organization.

In his manifesto, Hinkie writes at length about the importance of bringing the rigors of science to the uncertainties of sport: “If you’re not sure, test it,” Hinkie writes. “Measure it. Do it again. See if it repeats.” Although previous research by the sports economist Dave Berri has cast doubt on the effectiveness of tanking,” this new paper should remind every basketball GM that the best way to win over the long-term is to develop a culture that doesn’t try to lose.

Motomura, Akira, et al. “Does It Pay to Build Through the Draft in the National Basketball Association?” Journal of Sports Economics, March 2016.